Palestinian Exports: Best Practice

Global markets are changing daily and companies across the world need to adapt to new realities. As the downturn intensifies, weaker business will fail. Palestinian companies face extraordinary hurdles in competing in international markets. But the economic turmoil is an opportunity for local companies to focus on their internal weaknesses so that they are export ready when the markets revive. There are three areas where Palestinian companies could improve in order to reach their full export potential: planning, R&D and marketing. These are the findings of a survey carried out by The Portland Trust, in partnership with the Palestinian Federation of Industries (PFI) and the Palestine Trade Center (Paltrade).

Based on a tool developed by Dr Amjed Ghanim, we analysed the export viability of leading export companies across the West Bank. Among the companies assessed, a few were exceptional. They had a very strong management structure, excellent financial planning and progressive product development and promotion. On the other side of the spectrum, there were a number of very weak companies who were crippled by poor management, development and production. Most of the companies in the survey had similar results with the same problem areas. We have called these companies - a “typical Palestinian company”. The typical company could be improved upon greatly if more emphasis was placed on planning, product development, packaging and promotion.

The Palestinian business environment is particularly affected by the political uncertainties. Movement and access is very limited and a dependency on trading with Israel has deterred many exporters from seeking other markets. Unpredictable export patterns do not induce local companies to raise their game.

Despite 2006 figures from the Palestinian Central Bureau of Statistics (PCBS) that 89% of total Palestinian exports are to Israel, there is a growing realisation among exporters that Israel is disengaging (both politically and economically) from the Palestinian private sector. There have been structural changes in the Israeli market as incomes rise, product costs increase and Israel moves towards higher value products and services. Additionally, Israel has opened its markets to low cost imports as costs for Palestinian products rise because of expensive transportation and security issues. All this is making it difficult for Palestinian enterprises to compete. The Palestinian private sector needs to shift from producing unfinished products and goods for sub-contractors in Israel to delivering final products for international markets. The Portland Trust believes that if Palestinian companies tackle their apparent weaknesses outlined in the paper, they will be transformed into successful export entities, opening new markets for them. We cannot ignore the political situation and the obstacles in trading abroad. But neither should these obstacles prevent Palestinian exporters from realising their export potential.